Final answer:
The new policy may cause the firm's current ratio to increase, decrease, or remain the same, depending on its impact on current assets and liabilities.
Step-by-step explanation:
The question states that all else is constant. In accounting, the current ratio is calculated by dividing the current assets by the current liabilities. As a general rule, a higher current ratio indicates a healthier financial position for a firm, while a lower current ratio indicates a weaker financial position. Therefore, if the new policy mentioned in the question has a positive impact on the firm's current assets or a negative impact on the firm's current liabilities, the current ratio would increase. Conversely, if the new policy has a negative impact on the firm's current assets or a positive impact on the firm's current liabilities, the current ratio would decrease.
For example, if the new policy encourages customers to pay their invoices more quickly, it would increase the firm's current assets, resulting in a higher current ratio. On the other hand, if the new policy imposes additional debt obligations on the firm, it would increase the firm's current liabilities, resulting in a lower current ratio.
Since the question does not provide specific details about the new policy, we cannot determine whether the firm's current ratio would increase, decrease, or remain the same.